Cleanup effort in need of tuneup?

State comptroller calls for cost-effective work rules at polluted sites

By Brian Nearing

Published 10:02 pm, Monday, April 22, 2013

Albany

Gov. Andrew Cuomo and state lawmakers should change the rules of a controversial pollution cleanup program that's already cost taxpayers nearly $1 billion and could cost another $2.1 billion in the coming years, state Comptroller Tom DiNapoli said Monday.

In a 33-page report on the Brownfield Cleanup Program, the comptroller said excessive use of state-issued tax credits to reward developers who clean up pollution and build new projects created one of the nation's costliest, most generous pollution programs. Despite the expense, the report said, the program has not cleaned up enough land.

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"The state has an opportunity now to improve the cleanup program to encourage more remediation and redevelopment of contaminated properties, and do so in a more cost-effective manner through better targeting of program dollars," DiNapoli said. The program is set to run through December 2015, and lawmakers are expected to debate whether it should be extended.

The report was praised by Jody Kass, executive director of New Partners for Community Revitalization, a not-for-profit group that has criticized the program in the past for lining the pockets of well-connected developers, while doing too little for community-based cleanups in less-affluent neighborhoods with less profit potential.

DiNapoli issued a similar warning on the brownfield program in 2008, which led lawmakers to put caps on tax credits and delay payments in an attempt to slow spending. Those steps trimmed about $300 million in potential tax credits, he found. Tax credits are as good as cash for five years. In any year, if a recipient's tax bill is less than the credit, a refund is issued from the state treasury.

A Times Union investigation in 2010 found that just 10 cents on every dollar of tax credits had gone to support cleanups, with the rest helping pay for construction of a variety of high-end projects including a luxury hotel in White Plains, a new office tower for a CEO who was once the highest-paid executive in America, and luxury condos in Manhattan that sold for up to $2 million each.

"It is the developers who don't need the credits that have been the ones who are getting them, while other developers have not been," said Kass. "It is about places like Buffalo, Utica, Syracuse, the South Bronx, the north shore of Staten Island, parts of Suffolk County ... communities where the private market is not functioning so well, where we want to see subsidies filling that gap."

Since lawmakers created the program in 2003 to deal with thousands of polluted sites, developers have enrolled 389 properties in the program and have finished cleanups on 128 sites, DiNapoli reported. That has cost the state nearly $1 billion in credits, and the program could cost another $2.3 billion if the uncompleted projects already in the program claim tax credits after finishing cleanups and construction.

DiNapoli suggested reforms including reducing tax credits on projects that "can proceed without state assistance" or creating a new program "without financial incentives for sites with limited contamination."

DiNapoli also pointed out a flaw in the law that created the program ---– developers who get taxpayer support are supposed to file annual reports with the state Department of Taxation and Finance explaining how much tax revenue a cleaned-up and rebuilt site generated. But the law did not give the department the enforcement power to get the reports. Consequently, most developers pocket the subsidy, but never file the reports, DiNapoli found. The absence of such reports makes it difficult to judge whether the tax credit program is generating financial benefits for the state, he added.

The program has "fallen short of its multibillion-dollar price tag," said David VanLuven, policy director with Environmental Advocates of New York. "The Cuomo administration has worked hard to clean up New York's economic development efforts and will find a broad base of willing partners to set this program on a firmer path moving forward."

Kass said her group will also issue reform recommendations in May that could include DiNapoli's suggestions.